In sync with stock markets, the rupee on Monday surrendered its earlier gains and closed 32 paise down at 55.74 against the US currency as dollar demand from banks and companies emerged at the fag-end after S&P warned it could lower India’s sovereign rating. Forex dealers said the rupee weakened as investors fear the rating downgrade could raise international dollar lending rates for Indian companies.
The rupee resumed higher at 55.10 per dollar compared to last week’s close of 55.42 at the Interbank Foreign Exchange (Forex) Market as banks and companies sold dollars in view of fresh capital inflows, coupled with firm opening in stocks. But, the rupee failed to maintain its opening gains and dropped to 55.82 before settling at 55.74 after stocks declined. This represented a loss of 32 paise or 0.6 per cent from its last close.
Bonds firm up on good buying
Government securities (G-sec) firmed up on good buying by banks and companies. The 8.79 per cent G-sec maturing in 2021 jumped to Rs 102.95 from Rs 102.79 previously, while its yield moved down to 8.33 per cent from 8.35 per cent.The 9.15 per cent G-sec maturing in 2024 spiked to Rs 105.93 from Rs 105.85, while its yield eased to 8.37 per cent from 8.38 per cent. The 8.19 per cent G-sec maturing in 2020 shot up to Rs 100 from Rs 99.8, while its yield fell to 8.18 per cent from 8.22 per cent. The 8.15 per cent G-sec maturing in 2022, the 8.24 per cent G-sec maturing in 2018 and the 8.28 per cent G-sec maturing in 2027 also ended higher at Rs 100.05, Rs 100.14 and Rs 98.39, respectively.
Call rates decline
Call rates declined on ample liquidity in the banking system amid lack of any demand from borrowing banks. The rate finished lower at 8.1 per cent from last Friday’s close of 8.2 per cent, it moved in a range of 8.2 per cent and eight per cent. The Reserve Bank of India under the Liquidity Adjustment Facility purchased securities worth Rs 88,685 crore from 36 bids at the one-day repo auction at a fixed rate of eight per cent and sold securities worth Rs 20 crore at one bid at the one-day reverse repo auction at a fixed rate of seven per cent.